Exhibit 1
AGREEMENT
AGREEMENT dated as of September 2, 2003 (this "Agreement") by and
between Patriot Gold Corp., a Nevada corporation (the "Company"), and Xxxxx
Xxxxxxxxx (the "Preferred Stockholder").
RECITALS
WHEREAS, the Preferred Stockholder is the legal and beneficial owner of
all the issued and outstanding Series A 7% Redeemable Preferred Stock (the
"Preferred"); and
WHEREAS, the Preferred Stockholder was an officer and director of the
Company until he resigned in July 2003; and
WHEREAS, the Preferred Stockholder desires that the Company exchange
all his 13,500,000 shares of Preferred for 13,500,000 shares of common stock of
the Company, and the Company has agreed to effectuate such exchange upon the
terms and subject to the conditions set forth herein.
NOW, THEREFORE, in consideration of the premises and the mutual
representations, warranties, covenants, agreements and undertakings contained in
this Agreement, and other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the Company and the Preferred
Stockholder hereby agree as follows:
ARTICLE I
EXCHANGE
Section 1.1 Exchange. Upon the terms and subject to the conditions set
forth in this Agreement, simultaneous with the execution and delivery of this
Agreement, (i) the Preferred Stockholder shall deliver to the Company the stock
certificate issued in the name of the Preferred Stockholder representing
13,500,000 shares of Preferred, duly endorsed in blank or accompanied by stock
powers duly executed in blank, in proper form for transfer and (ii) the Company
shall deliver to the Preferred Stockholder stock certificates representing
13,500,000 shares of common stock of the Company (the "Common Stock"). It is the
intention of the parties that such exchange is a private transaction exempt from
the registration requirements of the Securities Act of 1933, as amended (the
"Securities Act").
Section 1.2 Restricted Securities. The Common Stock being issued to the
Preferred Stockholder hereunder are duly and validly issued, fully paid and
non-assessable, and will be free of any liens, claims or encumbrances and
restrictions on transfer other than the fact that such shares are "restricted
securities" as such term is defined under the Securities Act. Accordingly, the
Common Stock received by the Preferred Stockholder may only be sold or
transferred pursuant to an effective registration statement or in accordance
with an exemption from registration under the Securities Act.
Section 1.3 Legend. The certificates evidencing the Common Stock shall
contain a restrictive legend in substantially the following form (and a
stop-transfer order may be placed against transfer of the certificates for such
shares):
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR
THE SECURITIES LAWS OF ANY STATE OR OTHER JURISDICTION AND
NEITHER SUCH SECURITIES NOR ANY INTEREST THEREIN MAY BE
OFFERED, SOLD, TRANSFERRED, PLEDGED OR OTHERWISE DISPOSED OF,
EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER
THE ACT AND ANY OTHER APPLICABLE SECURITIES LAW OF ANY STATE
OR OTHER JURISDICTION OR THERE IS AN OPINION OF COUNSEL
SATISFACTORY TO THE ISSUER, THAT AN EXEMPTION THEREFROM IS
AVAILABLE AND THAT SUCH DISPOSITION IS IN COMPLIANCE WITH
APPLICABLE SECURITIES LAWS OF ANY STATE OR OTHER JURISDICTION.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF THE PREFERRED STOCKHOLDER
The Preferred Stockholder hereby represents and warrants to the Company
the following:
Section 2.1 Ownership of the Preferred. The Preferred Stockholder is
the sole record and beneficial owner of the Preferred Stock and has good and
marketable title to such shares, free and clear of any title defect, objection,
security interest, pledge, encumbrance, lien, charge, claim, option,
preferential arrangement or restriction of any kind, including, but not limited
to, any restriction on the use, voting, transfer, receipt of income or other
exercise of any attributes of ownership (collectively, "Liens"). Neither the
Preferred Stockholder nor his affiliates has any interest, directly or
indirectly, in any other equity in the Company or its affiliates, or has any
other direct or indirect interest in any tangible or intangible property of the
Company, or has any direct or indirect outstanding indebtedness to or from the
Company, or related, directly or indirectly, to its assets. Upon consummation of
the transactions contemplated by this Agreement, the Preferred Stockholder shall
have no direct or indirect interest in the Company, other than as expressly
provided for herein.
Section 2.2 Authority. The Preferred Stockholder has the absolute and
unrestricted right, power and authority to execute and deliver this Agreement
and all documents and instruments specified herein, to carry out his obligations
hereunder and to consummate the transactions contemplated hereby. This Agreement
has been duly executed and delivered by the Preferred Stockholder and, assuming
due authorization, execution and delivery by the Company, this Agreement
constitutes a legal, valid and binding obligation of the Preferred Stockholder,
enforceable against him in accordance with its terms.
Section 2.3 Approval of Transaction; No Conflict. The execution and
delivery of this Agreement by the Preferred Stockholder does not, and the
performance of this Agreement by the Preferred Stockholder will not, require any
consent, approval, authorization or other action by, or filing with or
notification to, any person, entity, governmental authority or regulatory
authority, other than the filing by the Preferred Stockholder of a Form 4 and a
Schedule 13D with the Securities and Exchange Commission (the "SEC").
Furthermore, the execution, delivery and performance of this Agreement by the
Preferred Stockholder does not and will not (x) conflict with or violate any
agreement, law, rule, regulation, order, writ, judgment, injunction, decree,
determination or award to which the Preferred Stockholder is a party or by which
any of his assets are bound or (y) result in the creation or imposition of any
Lien on the Preferred.
Section 2.4 Investment Intent. The Preferred Stockholder is an
"accredited investor", as that term is defined in Regulation D under the
Securities Act. The Preferred Stockholder acknowledges that he is able to
evaluate and has such knowledge and experience in financial or business matters
that he is capable of evaluating the merits and risks of accepting the Common
Stock in exchange for the Preferred, including without limitation, foregoing the
dividend and liquidation preference rights of the Preferred. The Preferred
Stockholder further acknowledges that the shares of Common Stock are restricted
securities, and as such cannot be offered or sold unless they are subsequently
registered under the Securities Act and any applicable state securities laws or
an exemption therefrom is available. The Preferred Stockholder is receiving the
Common Stock for his own account and not with a present view towards the public
sale or distribution, other than as set forth in this Agreement. The Preferred
Stockholder understands that the Common Stock is being offered and sold to him
in reliance upon specific exemptions from the registration requirements of
United States federal and state securities laws and that the Company is relying
upon the truth and accuracy of, and the Preferred Stockholder's compliance with,
the representations, warranties, agreements, acknowledgments and understandings
of the Preferred Stockholder set forth herein in order to determine the
availability of such exemptions and the eligibility of the Preferred Stockholder
to acquire the Common Stock. The Preferred Stockholder and his advisors, if any,
have been furnished with all materials relating to the business, finances and
operations of the Company and materials relating to the offer and sale of the
Common Stock which have been requested by the Purchaser or his advisors. The
Preferred Stockholder and his advisors, if any, have been afforded the
opportunity to ask questions of the Company.
Section 2.5 Counsel. The Preferred Stockholder represents that he has
had the opportunity to review and discuss this Agreement with counsel of his
choosing, that he knows and understands the legal effect of this Agreement and
the transactions contemplated hereby, that he requested the exchange of his
Preferred to Common Stock and that he is voluntarily executing and delivering
this Agreement to the Company.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to the Preferred Stockholder
the following:
Section 3.1 Authority. The Company is duly organized and validly
existing under the laws of the State of Nevada and has been duly authorized by
all necessary and appropriate action to enter this Agreement and consummate the
transactions contemplated herein. The Company has the absolute and unrestricted
right, power and authority to execute and deliver this Agreement and all
documents and instruments specified herein, to carry out its obligations
hereunder and to consummate the transactions contemplated hereby. This Agreement
has been duly executed and delivered by the Company and, assuming due
authorization, execution and delivery by the Preferred Stockholder, this
Agreement constitutes a legal, valid and binding obligation of the Company,
enforceable against the Company in accordance with its terms.
Section 3.2 Approval of Transaction; No Conflict. The execution and
delivery of this Agreement by the Company does not, and the performance of this
Agreement by the Company will not, require any consent, approval, authorization
or other action by, or filing with or notification to, any person, entity,
governmental authority or regulatory authority. Each person affiliated with the
Company whose consent is required has duly authorized the execution and delivery
of this Agreement and the consummation of the transactions contemplated hereby,
and such authorization shall not have been amended, modified or withdrawn in any
manner prior to the Closing Date. Furthermore, the execution, delivery and
performance of this Agreement by the Company does not and will not conflict with
or violate any agreement, law, rule, regulation, order, writ, judgment,
injunction, decree, determination or award to which the Company is a party.
ARTICLE IV
TRANSFER OF COMMON STOCK; REGISTRATION RIGHTS
Section 4.1 Transfers to Current Directors. The Preferred Stockholder
acknowledges that the Company has requested that he transfer 3,000,000 shares of
his Common Stock to each of Xxxxxx Blomkamp, Xxxxxx Xxxxxxxxx and Xxxxxx Xxxxx,
the three current directors of the Company, and has agreed to consider such
transfer. If the Preferred Stockholder decides, which decision shall be made by
him in his sole and absolute discretion, to make such transfers or any portion
thereof, said private transfers shall be effected through a separate agreement
between the Preferred Stockholder, as transferor, and each of the three
individuals, as transferee. The Preferred Stockholder agrees to coordinate such
transfers with the Corporation, and further agrees that such decision by him
shall be made no later than the end of the next fiscal quarter of the
Corporation.
Section 4.2 Registration. In consideration of the exchange by the
Preferred Stockholder of the Preferred Stock for the Common Stock, the
contemplated transfer by the Preferred Stockholder of an aggregate of 9,000,000
shares of Common Stock as provided above and other good and valuable
consideration, the Company hereby agrees that (a) it shall prepare, and, on or
prior to December 31, 2003, use its best efforts to file with the SEC a
Registration Statement on Form SB-2 covering the resale by the Preferred
Stockholder of all his shares of Common Stock and (b) if, at any time prior to
the filing of the registration statement contemplated by (a) above, the Company
shall determine to file with the SEC a registration statement relating to an
offering for its own account or the account of others under the Securities Act
of any of its equity securities (other than on Form S-4 or Form S-8 or their
then equivalents relating to equity securities to be issued solely in connection
with any acquisition of any entity or business or equity securities issuable in
connection with stock option or other employee benefit plans), the Company shall
send to the Preferred Stockholder written notice of such determination and, if
within ten (10) days after the effective date of such notice, the Preferred
Stockholder shall so request in writing, the Company shall include in such
registration statement all or any part of the Common Stock the Preferred
Stockholder requests to be registered. Notwithstanding the foregoing, if, in
connection with any underwritten public offering for the account of the Company
the managing underwriter(s) thereof shall impose a limitation on the number of
shares which may be included in the registration statement because, in such
underwriter(s)' judgment, marketing or other factors dictate such limitation is
necessary to facilitate public distribution, then the Company shall be obligated
to include in such registration statement only such limited portion of the
Common Stock with respect to which such holder has requested inclusion hereunder
as the underwriter shall permit. The rights granted herein to the Preferred
Stockholder are not assignable by him without the prior written consent of the
Company. The Company agrees that the rights granted herein shall not be
rescinded and shall remain in full force and effect in accordance with the terms
hereof notwithstanding the Preferred Stockholder deciding not to transfer
9,000,000 shares of Common Stock to the three current directors of the Company.
ARTICLE V
INDEMNIFICATION
Section 5.1 Indemnification by the Preferred Stockholder. The Company
and its successors and assigns (collectively, the "Company Parties") shall be
indemnified and held harmless by the Preferred Stockholder from and against any
and all damages, losses, liabilities, taxes (including any deficiencies and
penalties and interest thereon), and costs and expenses (including, without
limitation, reasonable attorneys' fees and disbursements) (collectively,
"Damages") resulting from any misrepresentation, breach of warranty or
nonfulfillment of any covenant or agreement on the part of the Preferred
Stockholder contained in this Agreement and as a result of the transaction
contemplated herein.
Section 5.2 Indemnification by the Company. The Preferred Stockholder
and his affiliates, consultants, representatives and their respective successors
and assigns shall be indemnified and held harmless by the Company from and
against any and all Damages resulting from any misrepresentation, breach of
warranty or nonfulfillment of any covenant or agreement on the part of the
Company contained in this Agreement and as a result of the transaction
contemplated herein.
Section 5.3 Notice. Each party hereto agrees to give to the other
prompt notice of any claim or action by a third party or occurrence of any event
which may give rise to a claim or action for indemnification hereunder. The
failure to provide such notice shall not release the indemnifying party from its
obligations under this Article V, except to the extent that the indemnifying
party is materially prejudiced by such failure.
ARTICLE VI
GENERAL PROVISIONS
Section 6.1 Entire Agreement. This Agreement contains, and is intended
as, a complete statement of all of the terms of the arrangements and
understandings between the parties with respect to the matters provided for, and
supersedes any previous agreements and understandings between the parties with
respect to those matters.
Section 6.2 Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York applicable to
agreements made and to be performed wholly in such State, without regard to
conflict of law rules applied in such State. EACH OF THE UNDERSIGNED HEREBY
WAIVES FOR ITSELF AND ITS PERMITTED SUCCESSORS AND ASSIGNS THE RIGHT TO TRIAL BY
JURY IN ANY ACTION OR PROCEEDING INSTITUTED IN CONNECTION WITH THIS AGREEMENT.
Section 6.3 Notices. Any notice required or given with respect to this
Agreement shall be valid and effective when delivered (i) by registered or U.S.
post office stamped certified mail, (ii) by a nationally recognized overnight
air courier, or (iii) by hand, in all cases to:
If to the Company, to:
Patriot Gold Corp.
Xxxxx 000
0000 Xxxxxxxx Xxxxxx
Xxxx Xxxxxxxxx, X.X., Xxxxxx X0X 0X0
Attention: President
with a copy to:
Xxxxxxxxxx Xxxxxxxxx & Xxxxxx, LLP
00 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx Xxxxx, Esq.
If to the Preferred Stockholder, to:
Xxxxx Xxxxxxxxx
000 Xxxxxxx Xxxxxx
Xxxxx Xxxxxxxxx, X.X., Xxxxxx X0X 0X0
Any party hereto may change such address by notice given at least five (5) days
in advance to the other party in accordance with this Section.
Section 6.4 Binding Agreement. This Agreement, including without
limitation, all the representations and warranties contained herein, shall be
binding upon and inure to the benefit of the parties hereto and their respective
permitted successors and assigns.
Section 6.5 Amendment. This Agreement may be amended or modified only
by a written instrument executed by all of the parties hereto.
Section 6.6 No Waiver. The failure of a party at any time or times to
require performance of any provisions hereof shall in no manner be deemed to
affect the party's right at a later time to enforce the same. No waiver by any
party of the breach of any term contained in this Agreement, whether by conduct
or otherwise, in any one or more instances, shall be deemed to be or construed
as a further or continuing waiver of any such breach or of the breach of any
other term or provision of this Agreement.
Section 6.7 References. The headings in this Agreement are solely for
the convenience of the parties, and are not intended to and do not limit,
construe or modify any of the term and conditions hereof.
Section 6.8 Unenforceability. If any provision of this Agreement shall
be held to be invalid or unenforceable, such invalidity or unenforceability
shall attach only to such provision and only to the extent such provision shall
be held to be invalid or unenforceable and shall not in any way affect the
validity or enforceability of the other provisions hereof, all of which
provisions are hereby declared severable, and this Agreement shall be carried
out as if such invalid or unenforceable provision or portion thereof was not
embodied herein.
Section 6.9 Counterparts. This Agreement may be executed by facsimile
and in counterparts, each of which shall be an original, but all of which
together shall constitute one and the same agreement.
Section 6.10 Further Assurances. The parties hereto will execute and
deliver such further instruments and documents and do such further acts and
things as may be reasonably required to carry out the intent and purposes of
this Agreement.
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement on the date first written above.
PATRIOT GOLD CORP.
By: /s/ Xxx Blomkamp
---------------------------------------
Name: Xxx Blomkamp
Title: President & CEO
/s/ Xxxxx Xxxxxxxxx
---------------------------------------
Xxxxx Xxxxxxxxx
Address: 000 Xxxxxxx Xxxxxx
Xxxxx Xxxxxxxxx, X.X. Xxxxxx X0X 0X0
